Gartner upgrades worldwide IT spending forecast

Worldwide IT spending on public cloud services grows four times more than overall IT spending

Gartner on Thursday upgraded its forecast for worldwide IT spending, saying it will grow 7.1 percent this year to US$3.7 trillion as companies migrate to the cloud and spend more on software and IT services.

The research firm previously forecast a growth of 5.6 percent in worldwide IT spending compared to last year, in which spending totaled $3.4 trillion and increased 5.9 percent from 2009. Growth in IT spending will continue through 2012, said Richard Gordon, research vice president at Gartner, in a statement.

The revised projections reflect the minimal impact on tech spending of the Japan earthquake and tsunami on March 11, which affected supply chains and caused extensive damage to buildings and factories along the country's eastern coast. The earthquake may have caused problems in supply of components, but it hasn't affected overall IT spending, Gordon said.

The hardware segment is poised for the fastest growth, but the greatest amount of spending will take place on telecom, according to Gartner's forecast. Spending on telecommunications will increase to $2.1 trillion, growing year-over-year by 6.9 percent, but slower than the 7.3 percent growth last year. Hardware spending is expected to grow faster that other sectors, at a rate of 11.7 percent to $419 billion, albeit slower than last year's growth rate of 12.1 percent.

Spending will grow in the software and IT services segments, partly driven by the growing adoption of public cloud services and software-as-a-service. On a percentage basis, spending on IT services will more than double, growing by 6.6 percent to reach $846 billion. Last year, spending on IT services totaled $793 billion, growing only by 3.1 percent. Software spending is expected to grow by 9.5 percent year-over-year to $268 billion, Gartner said.

Though a marginal part of overall IT spending, cloud computing services are emerging as a driver for IT spending in some markets, growing by more than four times than overall IT spending, Gordon said. The effect of migration to public cloud services spending likely will spill over to the software sector as companies spend more on software-as-a-service.

"At about $10 billion, software as a service ... already accounts for 10 percent of enterprise applications software spending, and by 2015 this share is expected to increase to close to 15 percent and to exceed $20 billion in annual spending," Gordon said.

But the overall spending on the cloud is still nominal, Gartner said. Spending on public cloud services will be roughly $89 billion this year, compared to $74 billion last year. The market will continue to grow and reach $177 billion by 2015, but at the time be only 5 percent of the total IT spending.

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